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A beautifully told story with colorful characters out of epic tradition, a tight and complex plot, and solid pacing. -- Booklist, starred review of On the Razor's Edge

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Monday, October 17, 2011

The Feast of Ignatius of Antioch

Iggy

A pot of miscellany today.

1. Like his good bud Polycarp of Smyrna, Ignatius of Antioch was a disciple of the Apostle John and was appointed by Simon Peter to lead the church at Antioch after Evodius, who had been one of the Seventy-Two. Early writers stated that Iggy was the young child in Mark 9:35:

And taking a child, he set him in the midst of them. Whom when he had embraced, he says to them: Whosoever shall receive one such child as this in my name receives me. And whosoever shall receive me receives not me but him that sent me.

But their reasons for saying so (and we must suppose they had reasons) have been long lost. Still, it's one of those things that really ought to be true, but Ignatius was probably born about 20 years too late.

Iggy wrote several letters prior to his death ca. AD 100 that used to be read in the churches: to the Churches of Ephesus, Magnesia, Tralles, Rome, Philadelphia, and Smyrna; and to his friend Polycarp. These epistles have sometimes been counted as among the "lost books of the Bible," but of course they had never been lost by the traditional churches -- the Orthodox, the Catholic, et al. (Other letters read publicly included those of Polycarp and of Clement of Rome. The Bible, as such, had not yet settled down, and there is at least one such early compendium that includes I Clement (to the Corinthians).)

As an aside, a disciple of his buddy Polycarp was Irenaeus of Lyons, who died in the late 100's; so we see that on the eve of the third century, there was still someone kicking who was connected to the Apostles by two degrees of separation: Irenaeus ← Polycarp ← John ←Jesus. This is why one does not get too excited to learn that, say, Mark's gospel was not written until AD 60!

2. A cousin of mine has just had stem cell treatment for a cancer. The treatment was eminently successful and she has already been released home. The stem cells were taken from her own body. Embryonic stem cells have so far done nothing but trigger runaway cancers. Along the same lines, we read that induced pluripotent stem cells taken from a patient's skin biopsy have been transformed into liver cells.

3. Along the same lines, we have this curious video revealing a derisive and dismissive view of science. Boo on those anti-science fanatics. Or something.

it’s not easy to get teleology and evolution to clash – they simply aren’t fighting for the same conceptual space. Teleology is not an account of the genesis of a population, nor does it consist in relation to an ancestor – it starts off as a description of behavior. Lions are obviously pursuing some goal when they chase down antelopes or seek out drinking pools

A possible flaw in the logic

5. Meanwhile we find people occupied with occupation. This is the one where students agitating to have their loans forgiven are denouncing the greed of the lenders who would like their money back. (Let us recall while we are at it that one of the save-the-economy provisions the current administration enacted was to bring all student loans under government control. Introducing: the next big bubble.) Naturally, when the price of bread gets too high, the impulse is to lynch the bakers and burn down the bakeries; and then blink in stupefied wonder when things get worse. One recalls the anti-bourgeoisie youth demonstrations of the 1920s and 30s demanding that the government DO SOMETHING about the capitalists. Which they did.

One thing overlooked is that Wall Street -- the stockbrokers and bond traders -- had little to do with the mortgage bubble. Some history:

Fannie Mae and Freddie Mac were formed by the government for the sole purpose of packaging mortgage home loans and selling the bundles (“derivatives”) to investors to secure additional monies required by law to be loaned out for still more mortgages. The purpose was to increase home ownership; which it did: home ownership had hovered around 65% for thirty years. This increased it to 69% — and created the largest housing bubble in US history.Note: This was belief in magic: people who q) owned homes were p) more stable, productive, prosperous, etc. The Besserwissers thought that by forcing q they could encourage p. But the causality runs p→q not q→p.

Home prices (blue) skyrocket, then crash
halfway back. If you bought in early 2000s
you're still ahead. Meanwhile, bankshares (red)
increased about 1.5x, then lost half their
original value, dropping to 0.5

These “derivatives” were primo investment opportunities for Saudi and Chinese moneypants, since it was well-known that Americans always paid their mortgages. (How one could make money by buying and selling what other people owed always did escape me.) In any case, selling mortgage bundles to obtain money for more mortgages had inflation written all over it, and from 1998 to 2008, household real estate shot up to 2.3 times its original value (see graph, right). For many people the expected increase in their home value became their de facto savings account (so savings dried up and other savings-based investment by banks dwindled with it).

The government (via HUD regulations) compelled banks and the old surviving S&Ls to make specific percentages of their mortgages to lower income/bad credit rating applicants. Left to their own devices and to their lust for profit, banks would not have made these loans to begin with. But the reasoning was that since housing prices were more than doubling every ten years, these people could always pay back through flipping or by refinancing with the ever-growing equity.

Now, what was Fannie and Freddie to do with the subprime mortgages they were compelled to buy/resell? No one would buy them as-is. So they bundled them with primo mortgages. This is like selling off one’s rotten apples by putting one or two into every barrel of good apples. Given that the government compelled them to sell rotten apples, this was making the best of a bad deal. Not so much greed as desperation.

But for a while, thanks to the bundling and the inflation of home prices, it seemed that the default rate was far lower than had been expected. So private financiers began to enter the market. “Hmmm. Maybe this isn’t as bad as we thought.”

“If something cannot go on forever, it will stop.” The inflation of the housing bubble continued until 2007, when it began to deflate. However, the index of home sale prices in 2011 is still 1.7 times higher than it was in 1998, at the start of the bubble; while the bankshare index stands at only about half its pre-bubble value. (See graph, above)

Non-bank firm Bear Stearns was bailed out. Everyone breathed a sigh of relief: but it created what right wing economists call “moral hazard.” “Don’t worry, keep on truckin’ ‘Cause the government will bail us out. Whoo-hoo!" Then, the government did not bail out Lehman Bros, and investors panicked and pulled their money from that market, and the bottom fell out. Not greed, but panic.

Earlier efforts to rein in Fannie and Freddie were forestalled by their three biggest campaign recipients: Frank in the House and Dodd and Obama in the Senate.

Conclusion: we learned absolutely NOTHING from the earlier Savings and Loan debacle.

Those familiar with medieval financial panics will recognize the same search for a despised minority to blame for all the troubles. In those days, the international financiers and big money bankers were the Jews (and the Lombards; but the Lombards had an army). That's why "We are the 99%" has such an ominous ring.

It's interesting that the exact same trajectory was described for the imaginary National Financial Administration in Richard Sobel's alternate history For Want of a Nail (1973). The NFA, too, was tasked with making home ownership more available to more people, with the predictable and inevitable results that we have now seen played out in real life.

Details and other commentary can be found here:a.Wall Street's Gullible Occupiers (WSJ, the author was a member of the Financial Crisis Inquiry Commission and dissented from the majority's report.)b. Money talks, an editorial in the Ottawa Citizen by the delightfully quotable David Warren. Two quotes:

If you honestly think the banks are making too much money, then you should buy some bank shares.

and

If you don't believe this, do your own research. Ideally, go right to the scene, volunteering, and find out who is on the street in Port-au-Prince, or Juba, and who is only on the street in Ottawa. (This is a good way to meet Christians, incidentally.)

6 comments:

The point is that bankers are creating fiat money that is enriching bankers in particular.

Now the centralized fiat money and nationalization of credit was a demand first expressed by 19C Communists. Why the Conservatives are defending it?Do they not realize that the fiat money and nationalization of credit was the biggest reason behind the ever-increasing State?. This is what enabled the State to grow without limit and conservatives have participation and continue to do so out of some misplaced loyalty towards the bankers.

I do not know what the Conservatives defend or not. State power has been growing ever since the death of the medieval order, regardless whether monarchy or democracy, and did so long before fiat money became common. And of course as Chesterton noted: It is the function of progressives to continue to make mistakes; it is the function of conservatives to see to it that those mistakes are never corrected.

Alas, if only it had been merely a bail-out. When the system seizes up through lack of liquidity, restoring liquidity is no more than adding oil to an engine. But the problem here was not liquidity, but enormous numbers of mortgages lent under government orders to people incapable of paying them back.

A good friend of mine, who teaches at Sacred Heart Seminary in Detroit, gets quite irritated when Theodore of Mopsuestia is referred to as "Teddy the Mop". I'll have to run Iggy by him. Since I have an uncle named Ignatios, perhaps I can get away with it, although I've always called him Taki.